Rental Question: periodic or fixed term?

[TommyK]

Hi to all Experienced Landlords:
I will soon to be a new landlord. I am looking at REIN`s version of lease agreement. I plan to rent out the townhouse on a 12 months basis and hopefully my tenants would want to continue for the next year.

So my question is, what would be the best way to go if they want to continue renting (while keep my options open to raise the rent after a year?)

I am thinking of fixed term tenancy agreement of 12 months and let them know that we can work out another lease one month prior to the end of the term.

I understand that if tenancy is not terminated after fixed-term, then it will automatically become month-to-month until Tenants give me notice.

Should I add an option to renewal on my contract or keep it simple to fixed-term? Please share with me your strategies.

I downloaded the agreement from the Critical Form section.

Any input is appreciated!

 

[Thomas Beyer]

QUOTE (TommyK @ Sep 27 2008, 03:17 PM) ...
I am thinking of fixed term tenancy agreement of 12 months and let them know that we can work out another lease one month prior to the end of the term.

I understand that if tenancy is not terminated after fixed-term, then it will automatically become month-to-month until Tenants give me notice.

...
yes, 6 or 12 month is common, then automatically month-to-month.

In the US, where we have a large property this 6 or 12 month lease is common too EXCEPT: at month 10 and 11 there is HUGE pressure to renew a lease for another 6 or 12 month .. no one goes month-to-month "automatically" .. it seems to be a cultural thing .. people expect it .. in Canada this is not common at all .. but certainly doable .. at the risk that they leave and you have to find a new tenant.

Essentially, since you have to give 3 month notice to terminate, you tell them in month 9 that their lease is ended in 3 months and give them a new lease at the same or different terms as an option.

 

[samwei]

QUOTE (thomasbeyer2000 @ Sep 27 2008, 10:24 PM) Essentially, since you have to give 3 month notice to terminate, you tell them in month 9 that their lease is ended in 3 months and give them a new lease at the same or different terms as an option.

Hi Thomas,

Is this correct in Alberta? My understanding for a fixed term lease agreement e.g. one year, is that the lease automatically expires/terminates on the last day of the lease without further notice, after which if the parties do not come to another written agreement, it becomes a month to month, at which time you do have to give 3 months notice to terminate.

I do have tenants on a one year lease, and my plan of action is to send them written notice 6 weeks before the end of the one year lease to the following effect:
* Notice that one year lease automatically ends and does NOT automatically renew to another one year lease.
* Following 3 options are available to the tenant: 1.) Renew the lease for another year at $x per month. 2.) Renew the lease on a month to month at $150 more per month than current lease amount. 3.) No renewal of any kind, in which case I will be advertising the suite immediately for showing to new tenants.

The notice will have 3 boxes, and the tenant will check off which alternative they want, and return the notice to me. The note will state IN BOLD PRINT that if they don`t return the notice to me or contact me that the lease will not be renewed, and I will be arranging to show the suite every day between 5 and 6 pm for the next 2 weeks.

I then plan to contact them by phone or in person to verify which option they want, and get that in writing from them if a new lease is desired, either for month to month, one year, or no renewal.

In the current lease agreement, I have amended the terms to allow me to show the suite to new tenants during the last 6 weeks of the current tenancy.

I hope that this will be clear enough for my tenants, so as to avoid any mix-ups.

 

[TommyK]

QUOTE (samwei @ Sep 28 2008, 05:14 AM) Hi Thomas,
Is this correct in Alberta? My understanding for a fixed term lease agreement e.g. one year, is that the lease automatically expires/terminates on the last day of the lease without further notice, after which if the parties do not come to another written agreement, it becomes a month to month, at which time you do have to give 3 months notice to terminate.

Yes, I just read the Act and it says that "No notice has to be given by the landlord or tenant to end a fixed term tenancy. It is courteous for the tenant and the landlord to provide the other party with a notice prior to moving out. No time frame is required for such a courtesy notice."

You are right, if no new lease is signed, it will be month-to-month until either landlord gives 3-month notice or tenant gives their one-month notice to leave.

I like the idea of being able to show the property 6 weeks before the end of month. A lot of prospective tenants start looking even before the 1st of the month. I will add that in my lease!!

I think I will go for 12-month fixed term, then I will go from there.

Thank you!
Tommy

 

[Thomas Beyer]

QUOTE (samwei @ Sep 28 2008, 07:14 AM) Hi Thomas,

Is this correct in Alberta? My understanding for a fixed term lease agreement e.g. one year, is that the lease automatically expires/terminates on the last day of the lease without further notice, after which if the parties do not come to another written agreement, it becomes a month to month, at which time you do have to give 3 months notice to terminate.

correct .. did I say that ?

QUOTE (samwei @ Sep 28 2008, 07:14 AM) I do have tenants on a one year lease, and my plan of action is to send them written notice 6 weeks before the end of the one year lease to the following effect:
* Notice that one year lease automatically ends and does NOT automatically renew to another one year lease.
* Following 3 options are available to the tenant: 1.) Renew the lease for another year at $x per month. 2.) Renew the lease on a month to month at $150 more per month than current lease amount. 3.) No renewal of any kind, in which case I will be advertising the suite immediately for showing to new tenants.

correct .. you can do that ..

QUOTE (samwei @ Sep 28 2008, 07:14 AM) The notice will have 3 boxes, and the tenant will check off which alternative they want, and return the notice to me. The note will state IN BOLD PRINT that if they don`t return the notice to me or contact me that the lease will not be renewed, and I will be arranging to show the suite every day between 5 and 6 pm for the next 2 weeks.

I then plan to contact them by phone or in person to verify which option they want, and get that in writing from them if a new lease is desired, either for month to month, one year, or no renewal.

In the current lease agreement, I have amended the terms to allow me to show the suite to new tenants during the last 6 weeks of the current tenancy.

I hope that this will be clear enough for my tenants, so as to avoid any mix-ups.

correct .. you can do that .. keep in mind that you canNOT raise rents more than 1x/year .. so after a 6 month lease expiry you canNOT raise the rents to existing tenants until month 12 is up !

 

[Nicola]

QUOTE (samwei @ Sep 28 2008, 10:14 PM) I do have tenants on a one year lease, and my plan of action is to send them written notice 6 weeks before the end of the one year lease to the following effect:
* Notice that one year lease automatically ends and does NOT automatically renew to another one year lease.
* Following 3 options are available to the tenant: 1.) Renew the lease for another year at $x per month. 2.) Renew the lease on a month to month at $150 more per month than current lease amount. 3.) No renewal of any kind, in which case I will be advertising the suite immediately for showing to new tenants.

The notice will have 3 boxes, and the tenant will check off which alternative they want, and return the notice to me. The note will state IN BOLD PRINT that if they don`t return the notice to me or contact me that the lease will not be renewed, and I will be arranging to show the suite every day between 5 and 6 pm for the next 2 weeks.

I then plan to contact them by phone or in person to verify which option they want, and get that in writing from them if a new lease is desired, either for month to month, one year, or no renewal.

Hi Sam,

Sounds like a great idea. How do the tenants react? Has anyone ever agreed to option 2?

Nicola

 

[samwei]

QUOTE (Nicola @ Oct 1 2008, 10:56 PM) Hi Sam,

Sounds like a great idea. How do the tenants react? Has anyone ever agreed to option 2?

Nicola

Hi Nicola,

They`ve chosen either 1 or 3. The reason for the higher rent for option 2 is that , in Edmonton, they can give 30 days notice to end their month to month lease, and if they do during the winter months, I can have a harder time renting out the unit. The higher rent is to compensate for the higher risk of an unfilled vacancy for a month or so.

The other valuable signal it tells me is that the tenant is contemplating moving within the next few months.

cheers,
Sam

 

[mlwilliamson]

Thomas,

Interesting topic. I am in the process of renting out a condo and am considering lease terms. It is my first investment property. What would be ideal term for this condo? I had one person contact me regarding 6 months term because they are having their house built (moving out after 6 months) another needs it for 2 years. What would be thewisest move for my first property? I would have to advertise the property after 6 months?

Thanks,



QUOTE (thomasbeyer2000 @ Sep 28 2008, 12:24 AM) yes, 6 or 12 month is common, then automatically month-to-month.

In the US, where we have a large property this 6 or 12 month lease is common too EXCEPT: at month 10 and 11 there is HUGE pressure to renew a lease for another 6 or 12 month .. no one goes month-to-month "automatically" .. it seems to be a cultural thing .. people expect it .. in Canada this is not common at all .. but certainly doable .. at the risk that they leave and you have to find a new tenant.

Essentially, since you have to give 3 month notice to terminate, you tell them in month 9 that their lease is ended in 3 months and give them a new lease at the same or different terms as an option.

 

[TommyK]

QUOTE (mlwilliamson @ Oct 5 2008, 07:07 PM) Thomas,

Interesting topic. I am in the process of renting out a condo and am considering lease terms. It is my first investment property. What would be ideal term for this condo? I had one person contact me regarding 6 months term because they are having their house built (moving out after 6 months) another needs it for 2 years. What would be thewisest move for my first property? I would have to advertise the property after 6 months?

Thanks,

I would tend to go for the 2-year tenants if they are qualified. You can always do 12 month fixed-term, then create another lease for the 2nd year. That way you have the option of raising your rent after the 1st year (and without additional advertising and cleaning up expense).

6 month term can be a hassle as you will have to advertise and find another tenant. If you go for this route, just make sure you put in your contract that you are able to do showing 6 weeks prior to the end of tenancy. 4 weeks is sometimes a bit tight to find the right tenant.

Just my 2-cents.
Regards,
Tommy

 

[Luong98]

QUOTE (samwei @ Sep 28 2008, 07:14 AM) Hi Thomas,

Is this correct in Alberta? My understanding for a fixed term lease agreement e.g. one year, is that the lease automatically expires/terminates on the last day of the lease without further notice, after which if the parties do not come to another written agreement, it becomes a month to month, at which time you do have to give 3 months notice to terminate.

I do have tenants on a one year lease, and my plan of action is to send them written notice 6 weeks before the end of the one year lease to the following effect:
* Notice that one year lease automatically ends and does NOT automatically renew to another one year lease.
* Following 3 options are available to the tenant: 1.) Renew the lease for another year at $x per month. 2.) Renew the lease on a month to month at $150 more per month than current lease amount. 3.) No renewal of any kind, in which case I will be advertising the suite immediately for showing to new tenants.

The notice will have 3 boxes, and the tenant will check off which alternative they want, and return the notice to me. The note will state IN BOLD PRINT that if they don`t return the notice to me or contact me that the lease will not be renewed, and I will be arranging to show the suite every day between 5 and 6 pm for the next 2 weeks.

I then plan to contact them by phone or in person to verify which option they want, and get that in writing from them if a new lease is desired, either for month to month, one year, or no renewal.

In the current lease agreement, I have amended the terms to allow me to show the suite to new tenants during the last 6 weeks of the current tenancy.

I hope that this will be clear enough for my tenants, so as to avoid any mix-ups.

Hi Sam,

If you don`t mind can you sent me the clause that you use to allow you to show the suite to new tenants during the last 6 weeks of the current tenancy? I would like to use it on my Lease Agreement.